He's got a "contract for life" at Chanel, but that hasn't stopped haute designer Karl Lagerfeld from extending his personal brand to Orrefors crystal, not to mention his image to become a videogame character and a silhouette on Coca-Cola bottles. A talented photographer, he also just shot the latest (risque) calendar for Pirelli.

And he's so well-established beyond fashion, a fake Twitter account of supposed Kaiser Karl musings boasts more than 300,000 followers.

Now the designer is going truly "masstige" with his latest venture: designing a capsule collection for Macy’s.

Speculation has been rampant in fashion circles that the iconic New York-based retailer and Lagerfeld were teaming up on a fashion venture. And indeed, it's now confirmed that Lagerfeld will launch a one-off line limited edition women’s collection for 250 Macy’s stores as well as online by fall of 2011.

The partnership should come as no surprise, as Lagerfeld was an early pioneer of the elite designer bringing an haute touch to the likes of Target and H&M, which is currently touting its latest designer collaboration, with Alber Elbaz of Lanvin. In 2004, Lagerfeld struck a deal to design a special label for H&M — a partnership that ended badly, despite being a commercial success.

Still, it didn't appear to sour him on going downmarket. And perhaps now, more than ever, the rationale for why he'd want to lend his name to a mass retailer is compelling.

In these still-smarting-from-the-recession times, spending a great sum on designer clothes may make one seem out of touch, but buying clothes on budget made by the same designer makes one seem wise, and more importantly, more confident to spend.

The Recession Chic trend in fashion remains strong and retailers are capitalizing on it by reinforcing the message that being a recessionista (if not a frugalista) is now more desirable than ever.

For Macy’s, the fashion designer collaboration factors newness and excitement and help shake the dynamics of the department store model which must evolve fast to survive.

In that vein, recent initiatives by the retailer such as Madonna’s exclusive-to-Macy's Material Girl line and the self-serve Macy’s Beauty Impulse model for cosmetics and fragrances in stores (a la Sephora) aim to pull in a younger consumer to experience a new retail model and hipper, breezier brand experience.

Lagerfeld is being strategic about how he balances his high-low personas. He announced this past September that he would not be showing his namesake Karl Lagerfeld collection during Paris Fall Fashion Week in favor of working on a fast fashion line, and justified his decision to WWD: “I prefer to work in another way. I can’t compete with Chanel. I don’t want to be the poor child of myself. This has been my vision for years.”

The Macy’s x Lagerfeld deal also has the blessing of Apax Partners, the New York-based private equity firm and owner of Karl Lagerfeld SAS — most likely because these deals are brief, highly profitable and visible for the brand, and once it is done, the Lagerfeld brand equity will continue to reign in its prestigious domain where it belongs.

In a recent interview about why he's bringing his creative energy to a lower-priced market, Lagerfeld said: “It’s funny for a person who has money to buy something inexpensive, and it’s great for a person with not so much money to be able to get something by a designer. It’s the new snobbism.”

Indeed, it's not about price. As he sniffs in his H&M promo above, "If you are cheap ... nothing helps."